Basel III and Its Implications for the World Banking System

In November 2010, the Group of 20 leading nations will be meeting in Seoul, South Korea,to create a foundation for balanced, sustainable growth in the future. An important part of that discussion will be the ongoing reform of financial and regulatory rules.

However, given the dynamic nature of the G20, it seems unlikely that the clarity desired by many in the industry will be obtained. If this is so, it raises interesting questions, among them:

• Is Basel III a destination, or the next point along a longer journey?
  
  
• Will there be a level playing field across the banking sector, and, if so, when?
  
  
• And, by extension, until the rules are clear, is it advantageous for banking leaders to keep things as they are, or to put in place key components of the anticipated reforms before they are required?

Following the Seoul G20 Summit, Accenture believes that many countries will push forward independently with specific requirements for the financial institutions operating within their geographies—as the United States as already done with the Dodd-Frank regulation.

As the regulatory landscape evolves, should banks push ahead with their own regulatory agendas? Accenture believes that it would be advantageous to do so, especially when one considers that the agendas of banks and regulators are not mutually exclusive

Accenture recommends that banks progress the main elements of Basel III. The direction has been set, and those institutions that can move ahead rapidly will be in a better position to devote the necessary management resources on customers, competitors and profitability as opposed to focusing on regulatory metrics and ratios in the future.

Specifically, Accenture sees three major areas in which banks seeking high performance under Basel III can improve their overall risk management:

• Accelerate the process integrating the risk and finance functions.
• Improve their overall data management.
• Prepare for “intelligent growth” by using analytics to enter new markets more safely.

Contact us to explore strategies to integrate Basel III into your journey toward achieving high performance.

Steve Culp is managing director - Accenture Risk Management. Based in London, he has 20 years of experience working with our global clients to deliver programs across strategy definition, risk management, enterprise performance management and large scale finance transformation. Culp was the global lead for Accenture’s Finance & Performance Management consulting services for global banking, insurance and capital markets institutions.

Kyo-Sik Bae is executive director - Risk Management. Based in Seoul, he has nearly 15 years of experience in the areas of core trading, settlement services, investment banking, credit lending processing and risk management. His deep financial services experience, broad knowledge of market risk, credit risk and risk data, and very strong technical skills around compliance matters helps clients become high-performance businesses.

Christopher Loh is director - Risk Management, Singapore, responsible for Southeast Asia. He has over 13 years of industry and consulting experience in financial services and risk management across Asia and the United Kingdom. He has extensive experience in risk management, risk and regulatory compliance, operating model and strategy, credit transformation, operational efficiency, banking transformation and capital management.